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4. You are given the following cost data for France, where they have nothing but capital and labor and make nothing but bread and wine.
4. You are given the following cost data for France, where they have nothing but capital and labor and make nothing but bread and wine. To make a loaf of bread To make a bottle of wine capital input 5 francs 20 francs labor input 4 francs 10 francs total cost 9 francs 30 francs a. Is bread-making more capital-intensive than wine-making or vice versa? Explain. b. Suppose trade opens and the price of wine rises while the price of bread falls. If capital and labor were completely immobile between bread-making and wine-making, who in France would gain from the shift in prices? Who would lose? (Consider the four groups of bread capitalists, bread laborers, wine capitalists, and wine laborers.)
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